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Bushfires Illuminate the Price of Burning Coal

David Fickling

(Bloomberg Opinion) -- You could smell the approach of Sydney’s bushfires two weeks away.

Leaving my home for work last month at a time when California’s fires were at their most intense, the sandalwood odor of burning eucalyptus was heavy on the air. Looking north from Bloomberg’s office to the far side of Sydney Harbour, the normally sparkling blue water was a barely discernible smudge. That was mostly not wildfire, but a dozen deliberate hazard-reduction burns under way across the metropolitan area in a last-ditch attempt to eliminate flammable plant litter and undergrowth before conditions worsened.

Tuesday will prove a test of how effective that has been. Sydney’s entire metropolitan area and a swathe of country in the Hunter Valley to the north and Illawarra to the south will face catastrophic fire danger, the highest risk rating in New South Wales state, thanks to strong winds combined with temperatures up to 37 degrees centigrade. Already, three are dead and 150 homes have been destroyed by fires elsewhere in New South Wales and Queensland state to the north.

Prime Minister Scott Morrison has been determined not to link the disasters to the country’s fractious climate and energy debate. Asked what his response would be to a couple who’d had to flee their homes and wanted to know what he was doing about climate change, he deflected.

“I'll give the same answer I gave yesterday, and that is I'm focused on the needs of the people in this room today,” Morrison told reporters at a bushfire evacuation center. Gladys Berejiklian, the premier of New South Wales, had the same response: “We have time on our hands to talk about those other issues,” she said.

This practiced reply — an Australian equivalent to the “thoughts and prayers” mouthed by American politicians after gun-violence episodes — may be hard to maintain given the area at greatest risk.

The Hunter Valley is the world’s largest export basin for thermal coal used in power stations. The Illawarra escarpment contains Australia’s oldest mines for coking coal used in steelmaking. This region was built on coal, which overtook iron ore to become the country’s most valuable export last year. Electoral seats in the Hunter, one of the few parts of Australia where coal is a major employer, swung heavily toward Morrison’s government in the country’s May election.

Australia’s climate debate is fraught, but it would be a whole lot more fraught if the country faced up to the scale of its responsibility. The country, with a population little larger than 25 million, likes to think of itself as a minor player on the global stage. “Australia is responsible for just 1.3% of global emissions,” Morrison told the United Nations General Assembly last month.

That argument is only tenable if you exclude the country’s exports from the equation. Australia is the world’s largest fossil fuels exporter after Russia and Saudi Arabia. The coal and natural gas the government expects to be shipped in 2024 will produce about 1.2 billion tons of carbon dioxide when burned, a larger emissions total than any nation except China, the U.S., India, Russia and Japan.

The exclusion of exports is, to be sure, standard in international carbon budgeting, which typically counts only emissions within a country’s borders toward its total. But even Australia’s ability for doublethink may be challenged by the sight of a government that’s aggressively trying to revive coal exports touring mining regions devastated by bushfires — events that will become more frequent and devastating as a result of climate change.

Neither the government nor the Labor opposition would countenance interfering with the export trade. Indeed, all the movement is in the opposite direction. Just last month, the Berejiklian government introduced a bill to ensure that the agency granting planning approval to new mining and petroleum projects couldn’t consider overseas greenhouse impacts as part of its environmental assessments. 

Climate change impacts could make existing homes uninsurable and temperature increases above 2 degrees centigrade may push some areas “beyond affordability or indeed habitability,” Insurance Australia Group Ltd. warned this year. As many as one in 20 homes could be rendered uninsurable by 2100 from natural disaster risk, according to a report by Australian Broadcasting Corp. last month.

Australians should understand what is happening. Government rhetoric isn’t just words, and its effects aren't just theoretical. A mass transfer of wealth is under way. For the sake of the small sum that comes into government coffers as mining royalties and taxes, politicians are doing everything to support activities that push more carbon into the atmosphere.

The consequence will ultimately be borne by local households, who will see rising costs for insurance and fire-resistant renovation, falling property values as fire-prone lands extend their reach, and ultimately the threat of destruction and even death when the inferno comes.

To contact the author of this story: David Fickling at dfickling@bloomberg.net

To contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

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